EBK ADVANCED FINANCIAL ACCOUNTING
EBK ADVANCED FINANCIAL ACCOUNTING
11th Edition
ISBN: 8220102796096
Author: Christensen
Publisher: YUZU
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Chapter 2, Problem 2.28BP

a.

To determine

Concept introduction

The consolidated balance sheet and the worksheets are the computed tools that are used to calculated the retained earnings and the dividend produced by the subsidiaries towards its parent company.

To prepare: a journal entry by cost method for the investment in snoopy company in the year 2009 .

a.

Expert Solution
Check Mark

Answer to Problem 2.28BP

The journal entry so passed gives a debit of investment and credit the cash with the same amount.

Explanation of Solution

    Costmethod entry on booksDebitCredit
    Cash30,000
    Dividend income30,000
    Record P co. 100%

    share of the snoopy co. 2009

    income

b.

To determine

Concept introduction

The consolidated balance sheet and the worksheets are the computed tools that are used to calculated the retained earnings and the dividend produced by the subsidiaries towards its parent company.

To prepare: the consolidate worksheet for the final values

b.

Expert Solution
Check Mark

Answer to Problem 2.28BP

The consolidate worksheet is prepared and discussed.

Explanation of Solution

    Book value calculation
    Total book value=Common stock+Retained earnings
    Original book value300,000200,000100,000
    Income statementPSDr.Cr.consolidated
    Sales

      850,000

      300,000

      1,150,000

    Less Cogs

      (270,000)

      (150,000)

      (420,000)

    Depreciation Exp

      (50,000)

      (10,000)

      (60,000)

    Sel. Exp

      (230,000)

      (60,000)

      (290,000)

    Dividend Income

      30,000

      30,000

    Net income

      330,000

      80,000

      30,000

      380,000

    Statement of Retain EarningPSDr.Cr.Consolidated
    Opening balance

      470,000

      155,000

      100,000

      525,000

    Net income

      330,000

      80,000

      30,000

      380,000

    Less dividend declared

      (225,000)

      (30,000)

      30,000

      (225,000)

    End balance

      575,000

      205,000

      130,000

      30,000

      680,000

    Income statementPeanut coSnoopy coEliminated DREliminated CRconsolidated
    Cash230,00075,000305,000
    Accounts received190,00080,000270,000
    Inventory180,000100,000280,000
    Investment in snoopy co300,000300,0000
    Land200,000100,000300,000
    Building and equipment700,000200,00010,000890,000
    Less accumulated depreciation500,00030,00010,000520,000
    Total assets1300,000525,00010,000310,0001,525,000
    Account payable75,00035,000110,000
    Bonds150,00085,000235,000
    Common stocks500,000200,000200,000500,000
    Retained earnings575,000205,000130,00030,000680,000
    Total liabilities1300,000625,000330,00030,0001,525,000

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Chapter 2 Solutions

EBK ADVANCED FINANCIAL ACCOUNTING

Ch. 2 - Prob. 2.11QCh. 2 - What is the modified equity method? When might a...Ch. 2 - Prob. 2.13AQCh. 2 - Prob. 2.14QCh. 2 - Prob. 2.15QCh. 2 - Prob. 2.16QCh. 2 - Prob. 2.17QCh. 2 - How are a subsidiary’s dividend declarations...Ch. 2 - Prob. 2.19QCh. 2 - Give a definition of consolidated retained...Ch. 2 - Prob. 2.21QCh. 2 - Prob. 2.22QCh. 2 - Choice of Accounting Method Slanted Building...Ch. 2 - Prob. 2.2CCh. 2 - Prob. 2.3ACCh. 2 - Prob. 2.4CCh. 2 - Prob. 2.5CCh. 2 - Prob. 2.6CCh. 2 - Prob. 2.1.1ECh. 2 - Multiple-Choice Questions on Accounting for Equity...Ch. 2 - Prob. 2.1.3ECh. 2 - Prob. 2.1.4ECh. 2 - Prob. 2.1.5ECh. 2 - Prob. 2.1.6ECh. 2 - Multiple-Choice Questions on Intercorporate...Ch. 2 - Prob. 2.2.2ECh. 2 - Prob. 2.3.1ECh. 2 - Prob. 2.3.2ECh. 2 - Prob. 2.3.3ECh. 2 - Prob. 2.3.4ECh. 2 - Cost versus Equity Reporting Winston Corporation...Ch. 2 - Prob. 2.5ECh. 2 - Prob. 2.6ECh. 2 - Prob. 2.7ECh. 2 - Income Reporting Grandview Company purchased 40...Ch. 2 - Prob. 2.9ECh. 2 - Carrying an Investment at Fair Value versus Equity...Ch. 2 - Investee with Preferred Stock Outstanding Reden...Ch. 2 - Prob. 2.12AECh. 2 - Prob. 2.13AECh. 2 - Prob. 2.14ECh. 2 - Prob. 2.15ECh. 2 - Prob. 2.16ECh. 2 - Prob. 2.17ECh. 2 - Changes ¡n the Number of Shares Held Idle...Ch. 2 - Prob. 2.19PCh. 2 - Carried at Fair Value Journal Entries Marlow...Ch. 2 - Prob. 2.21APCh. 2 - Equity-Method Income Statement Wealthy...Ch. 2 - Consolidated Worksheet at End of the First Year of...Ch. 2 - Consolidated Worksheet at End of the Second Year...Ch. 2 - Prob. 2.25PCh. 2 - Prob. 2.26PCh. 2 - Prob. 2.27BPCh. 2 - Prob. 2.28BP
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